Shorter Term – More Savings

Whether you’re refinancing your current home or buying a new one, something worth considering is a 15-year loan rather than a 30-year term. The payments will be a little higher but you’ll get a lower interest rate and you’ll build equity much faster.30348233-250.jpg

Let’s look at an example of a $300,000 mortgage with the choice of a 30-year term with a 3.92% rate compared to a 15-year term with a 3.2% rate. The payments would be $682.28 higher on the shorter term but the equity would be considerably higher even after you adjust for the higher payments.

Another benefit is that the shorter-term loan creates a forced savings situation where the savings on longer term loan might end up being spent rather than being saved and invested. A conscious decision to pay more in payments could pay big dividends in the future.

30 vs 15 82017.png

About bchrealestate

Specializing in beach and marina properties at the Channel Islands Harbor on California's Gold Coast located halfway between Malibu and Santa Barbara.
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